Killing the Precious

Which would you rather have? A market with no product, or a product with no market? Traction is everything.

That’s pretty much the central idea of customer development and all of the lean startup practices that have spun out of it. The goal is to make stuff people want, rather than trying to make people want your stuff.[Tweet this]

Our team of 4 rocked up to Microsoft’s very nice offices in Victoria on Friday evening with a couple of early beers down. We had an idea for a pitch that we really liked, but which we weren’t wedded to, having made it up over breakfast a few days earlier. This might’ve been the biggest factor in us winning.

The weekend rolls through 5 stages:

The opening pitches

We pitched One Tribe, as a way for travellers to connect with friends of friends around the world, to hang out and see the local side of life. This isn’t where we ended up on Sunday. There were good ideas pitched, some not so good, and there were a lot of passionate founders with a product they’d clearly been working on for some time. Let’s call it the precious.

Articulate your market, problem and assumptions

Market: people travelling to cities where they don’t know anyone

Problem: it’s hard to meet strangers you actually like

Biggest assumption: people want to meet strangers

Maybe it was the post-work beers or the light grip we had on what our product should be, but we kicked off with some pretty loose articulations, which meant we were open to accepting whatever potential customers told us later. Holding on too tight to any ideas of what you want your precious to be makes this all a lot harder.

Test your assumptions

This is when you learn what you got right and what you got wrong. You design experiments to specifically test the assumptions from the previous stage, then get out of the building and interact with customers. The goal is to either validate or invalidate your assumptions by testing them on your market.

“In a startup no facts exist inside the building, only opinions.”

Steve Blank

At the early stages this was interviewing punters around Victoria. By later stages you’re driving traffic to landing pages, minimally getting sign-ups and ideally building an MVP that customers actually use.

Invalidation feels a bit like failure – i.e. “I was wrong” – but it’s not failure at all. Both validation and invalidation are successful learnings. Not testing assumptions is failure. [Tweet this]

Act on what you’ve learned

Back at Microsoft HQ, the team debates what customers are really telling you about your market, problem and solution assumptions. This shouldn’t be a nice, agreeable chat – you should be arguing different interpretations of customer feedback. We very rarely started with consensus on what we heard – people really do hear what they want to hear.

If your assumption wasn’t validated by the people you plan to sell to then you have to change something, orpivot your model. Then its back to stage 2, to restate your market, problem, solution and assumptions, and go through the process again.

The closing pitches

You get just 5 minutes and 3 slides to describe the process of iterative experimentation, learning and response that your team went through. So the focus is on tight logic, smart experiments, as many pivots as possible, and a powerful demonstration of traction.

We won because we learned the most about what people want. And we learned the most because we let go of any preconceptions of what our product was going to be and listened to what people told us. Holidaymakers didn’t need help meeting strangers. Business travellers did. But they didn’t want to make new lifelong friends. They specifically asked for help connecting with peers for impromptu networking dinners. And more specifically they demonstrated demand for this around events. We focused on identifying a market with a real problem then designed a product to fit their needs. And NetworkTonight was born (cheers to Diane from Microsoft Ventures for the name!).

We reckon lean is about working smart, and why would you want to do anything else? Diane’s mate at MSV, Mukund, has written a great post on this:

In short:

say no to busy work, vanity metrics and coding without purpose

ask the right questions

maximise the amount of actionable insight

do this as efficiently as possible

What’s next for NetworkTonight?

We’ve all got day jobs but luckily we’re in the startup world already. So we’ve agreed to resist the temptation to take millions in funding (yeah right), instead taking advantage of further mentoring support from Diane Perlman at MSV and keeping on applying lean and working smart.

Keep an eye out for us next time you’re at a business event, stuck in the hotel bar, or sitting on your bed with room service and bad TV. Or get in touch now we’ll let you know about early product releases and how we get on with killing our precious.

One last point. As a non-technical entrepreneur I know that the world of startups can seem like a bit of an impenetrable black box if you’re not a developer. But none of our team did anything more technical than knocking together a few Unbounce pages and targeting hashtags on Twitter. You could even argue that customer insight and value propositions – a marketer’s bread and butter – are becoming the centre of gravity for savvy entrepreneurship. [Tweet this]

Coming soon, our top tips for how to win LSM. Seriously, just do this and you’ll stand a good chance. But it won’t be as easy as it sounds. And that’s why most won’t.

1. Follow the methodology

2. Argue your logic to make it tight

3. Build smart experiments

4. Gratuitous get out of the building reference

5. Kill the precious

6. Respond to everything you hear

7. Pivot accurately

8. Wrap it all up in a story

Scott Cooper is CMO and Head of Lab at The Sandpit. Cat Navarro is Operations Director at The Sandpit. Måns Gårdfeldt is Managing Director of PowerMeeter and Jonny Grubin is Founder of SoPost, both resident startups at The Sandpit. The Sandpit operates a private equity model for early stage startups, assembling next generation talent around disruptive digital products to push both out of beta and into the world faster.

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Entrepreneurs who rush into their ideas thinking that their product or service is a must-have often get (to quote Ray) “punched in the face”. This happens when the provided solution fails to address a real customer pain. The lean methodology of customer validation through MVPs helps avoid this situation to a large extent by ensuring that the provided solution is built around an existing problem, hence allowing the entrepreneur to achieve a good product-market fit before starting up.

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